PHILADELPHIA Intel Corp. was treading lightly on Thursday (June 4), eschewing the standard conference call with analysts after announcing its acquisition of Wind River Systems Inc. Still, there will undoubtedly be fallout from the semiconductor industry juggernaut's move in markets well beyond its traditional PC and server segments.
While the $844 million purchase of Wind River made barely a dent on Intel's $10.6 billion cash hoard—as of the end of the March quarter—the implications are enormous, not just for Intel but also for its customers.
The Wind River transaction, if it plays out as Intel hopes, will affect Intel's current and potential chip rivals as well as software vendors and OEMs in fields far removed from the computing sector, including aerospace and defense, automotive, consumer electronics, industrial, medical and mobile communications.
Although the company is folding Wind River into its software and services unit, Intel's goal is really to expand its current offerings into an even larger area of economic activity by offering the processor and embedded applications that drive the operation of nearly all electronic and high-tech equipment.
"We have very ambitious plans to grow in the embedded area as a key part of our strategy to turn every electronic product into a computing equipment," a spokesman for Intel said in an interview. "We are looking at multi-billion opportunities in the embedded area and while our software and services sales are nominal, the [Intel software] group is more strategic for the company's future."
Plainly, Intel is aiming to vastly expand its total available market with a strategy that foresees high-tech equipment manufacturers transforming their products by embedding into them computing power currently reserved for PCs and servers.
The Wind River acquisition is not about cementing Intel's current market position but, instead, is focused on opening up new opportunities for the chip maker in areas where it has struggled for years to gain traction, including the communications field.
In order to understand the significance of Intel's acquisition, one would have to examine the markets Wind River operates in and the partnerships it has forged over the years. While Wind River's annual sales of $360 million is a pittance compared with Intel's $38 billion, Intel plays in a much narrower market segment than Wind River.